In the specificfactors model, an increase in the price of
Manufactured goods will cause:
A)an increase in the real rental of capital.
B)a decrease in the real rental of capital.
C)no change in the real rental of capital.
D)a decrease in the nominal wage in the manufacturing sector.

Question

In the specific­factors model, an increase in the price of
Manufactured goods will cause:
A)an increase in the real rental of capital.
B)a decrease in the real rental of capital.
C)no change in the real rental of capital.
D)a decrease in the nominal wage in the manufacturing sector.

Quizplus · Accepted Answer

In the specific-factors model, an increase in the price of manufactured goods raises the demand for capital, which is specific to the manufacturing sector, leading to an increase in the real rental of capital.

In the Specific­factors Model, an Increase in the Price of

In the Specificfactors Model, an Increase in the Price of